George Osborne, the UK Chancellor of the Exchequer, today hiked the bank levy to offset other tax savings by financial institutions, as he seeks to provide greater tax relief for businesses in the Autumn statement to Parliament.

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Here Financial News provides reaction to some of the key measures announced by Osborne in Parliament today.

• Bank levy increase

In the statement. Osborne declared that corporation tax, which the government had already lowered from 28% to 24% and was set to decline to 22%, will now fall further - to 21% from April 2014.

However, to take into account the benefit to the banking sector of the reduction in corporation tax, Osborne said the bank levy will rise to 0.13% from the start of next year to ensure it raises at least £2.5bn as stipulated by the government. In his Budget speech earlier this year, Osborne had said the levy rate would rise to 0.105% from the start of next year.

The Chancellor said: “Making banks contribute more is part of our major reforms to the banking system.”

However, financial industry commentators branded the hike in the bank levy as “unhelpful” and “counterproductive” at a time when institutions are being required to lend more to boost the economy.

Chris Price, head of financial services in the UK for Ernst & Young, said: “If a bank is growing its balance sheet to try to quickly increase the supply of credit it can offer UK businesses, a blanket increase to the bank levy will actually penalise them. The fifth successive increase in the banking levy with no reward or differentiation for those banks that have made material strides towards meeting the government’s lending targets is counterintuitive if the government is serious about trying to persuade banks to lend more. “

Mark Boleat, policy chairman at the City of London Corporation, said: “The banking sector has been working hard to improve balance sheets while mobilising capital and stands ready to pay its fair share to support the economic recovery. What the banks, like all businesses, require though is stability and predictably in the tax system so that they can confidently plan for the future. In this context, a fifth increase in the bank levy is unhelpful.”

Tom Aston, financial services tax partner at KPMG, said: “This is the fifth successive increase in the bank levy over three years – probably some kind of tax record. News of the increase will be wearyingly familiar for banks, and is an alarming symptom of how rapidly banks’ balance sheets are shrinking. There is an element of the government chasing its own tail at each Budget and Autumn Statement in order to ensure that the bank levy yield still meets the magic £2.5bn figure.”

• The Deficit

Within his statement to Parliament, Osborne insisted that "the deficit is down, borrowing is down". Osborne said the independent Office for Budget Responsibility had forecast the UK deficit would fall from 7.9% last year to 6.9% this year and 6.1% next year, while borrowing was expected to fall to £108bn this year and then £99bn next year. He said: "The deficit is still far too high for comfort. The road is hard but we are on the right track."

Osborne had pledged in 2010 to eliminate the UK's structural deficit within five years, and for the debt to GDP ratio to be falling by the end of the Parliament term in 2015. However, the OBR found the UK has not met its test on debt reduction, and Osborne announced a one-year delay before the debt ratio starts to fall, which is now expected to be in 2016.

Angus Campbell, head of market analysis at Capital Spreads, said “there is very little in the way of improvement to our fiscal difficulties”.

He said: “The OBR’s growth forecasts have been unsurprisingly downgraded citing that they were previously based on a much stronger eurozone economy, so if the eurozone is to blame for so much we need to focus on readjusting who we trade with.”

Nick Beecroft, chairman and senior market analyst at Saxo Capital Markets, said the statement struck a "careful balance between fiscal probity and growth promotion, and between rich and poor". He said that as the statement showed no diversion from the Plan A deficit reduction programme, "stocks, sterling and gilts will be virtually unmoved”.

• Pensions tax allowances

The annual allowance for pensions tax relief is to be lowered from £50,000 to £40,000, though the drop is not as extreme as had been predicted in some quarters.

Andrew Tully, pensions technical director at MGM Advantage said that the step sends “totally the wrong signal to savers across the country”.

He said: “It is not so much the 1% of wealthy people who are immediately impacted by this change, but the legacy of undermining yet again the pensions system when we least need it.”

He added: “While this is a short-term win for the Treasury, in the longer term it will have a detrimental impact on savings in the UK. We need a simple, consistent savings system that people can trust.”

Tony Stenning, head of UK retail at BlackRock, said the measure should not put Britons off saving for retirement.

He said: “Britons need to be educated on the importance of saving regularly and as early as possible in their working life, as we look to build a savings culture which helps people to plan ahead for their retirement – they need to build what they need tomorrow, but can’t wait until tomorrow to begin.”

Mike Smedley, pensions partner at KPMG in the UK, said: “It is of course disappointing that Government is tinkering with tax and pensions again, less than two years after the current regime was introduced. This change will bring more ordinary people, not just “fat cats”, into the complicated area of tax charges on their pensions entitlements. Because people are not able to save uniformly for pensions over their careers, it will affect the pensions planning of many people as they approach retirement.”

• Consultation on SME shares

The government said it would launch a consultation regarding allowing small businesses’ shares to be included in new stocks and shares ISAs. Xavier Rolet, chief executive of the London Stock Exchange, welcomed the proposal as "good news for small businesses up and down the country".

• Infrastructure investment

The government has earmarked an extra £5.5bn for infrastructure investment, of which £1bn is aimed at road projects.